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From Antitrust Law Daily, March 4, 2016

Evidence did not support unilateral antitrust violation verdict in wood-processing suit

By Greg Hammond, J.D.

A jury’s verdict that a wood-processing company committed unilateral antitrust violations under Mississippi law was reversed by the Mississippi Supreme Court. The Court concluded that there was insufficient evidence to demonstrate that the wood-processing company engaged in monopolization, restrained or attempted to restrain the freedom of trade or production of a commodity, or engrossed or forestalled, or attempted to engross or forestall, any commodity (Georgia Pacific Corp. v. Cook Timber Co., Inc., March 3, 2016, Dickinson, J.).

Logging company Cook Timber Co., Inc. entered into a contract with national wood-processing company Georgia Pacific Corp., under which Cook Timber worked exclusively with Georgia Pacific. However, Georgia Pacific subsequently notified Cook Timber that its Leaf River Pulp Mill would no longer receive any pine pulpwood deliveries from Cook Timber. Cook Timber filed suit against Georgia Pacific, claiming antitrust violations, both unilaterally and through a conspiracy with other market participants, and breach of contract. The circuit court granted Georgia Pacific a directed verdict on Cook Timber’s conspiracy and breach of contract claims, and a jury returned a verdict for Cook Timber on its unilateral antitrust claim. Georgia Pacific appealed.

Insufficient unilateral antitrust claim. The Mississippi Supreme Court reversed the jury’s verdict, finding that there was a lack of evidence to support a claim that Georgia Pacific unilaterally engaged in prohibited practices under the state’s antitrust laws. First, there was no evidence to support a conclusion that Georgia Pacific monopolized or attempted to monopolize its industry. The case did not involve claims concerning Georgia Pacific’s industry, but rather from whom it decided to purchase raw material.

Second, nothing in the record suggested that Georgia Pacific sought to destroy competition. Rather, emails between Georgia Pacific executives demonstrated that its competitors were enjoying the same benefit Georgia Pacific sought—reduced timber prices.

Lastly, the Court noted that this case involves Georgia Pacific’s actions as a buyer, not a seller, and that Georgia Pacific had not agreed to a market-wide price fixing scheme. Rather, Georgia Pacific attempted to purchase timber at the lowest possible price from suppliers who deliver at a consistent price and intended to stockpile timber in anticipation of higher future timber prices, the Court found. This strategy and conduct “simply is not illegal” under Mississippi antitrust law, which prohibits a business from engrossing, forestalling, or attempting to engross or forestall any commodity, according to the Court.

Directed verdict proper on conspiracy claim. The state high court also affirmed the circuit judge’s grant of a directed verdict on the conspiracy claim, agreeing that Cook Timber set forth insufficient evidence to establish the necessary agreement between market participants. The only evidence of conduct involving other market participants was an email between Georgia Pacific executives reflecting an observation that “some of the competition is pulling their price down about as fast as we are.” The email fell “far short” of establishing either an express or implied agreement between Georgia Pacific and its competitors, the Court found. Consequently, the Court concluded that no reasonable juror, without engaging in speculation, could read the email to say more than that the author of the email observed that other companies were now paying lower prices for timber.

The case, however, was reversed and remanded for a new trial on the breach of contract claim.

Dissent. Justice King issued a dissenting opinion, arguing that the majority misinterpreted the antitrust statutes and disagreeing with the majority’s determination that Cook Timber failed to present sufficient evidence to support an antitrust violation. In particular, Justice King suggested that the state’s antitrust statute contemplates and entirely encompasses buying behavior in its prohibition, stating that “businesses have long been prohibited from certain purchasing behavior, including certain behavior to purchase at low prices.” Justice King therefore argues that the Court must examine the evidence before it.

The case is No. 2013-CA-01869-SCT.

Attorneys: James H. Heidelberg (Heidelberg Steinberger Colmer & Burrow PA) for Georgia Pacific Corp. Joseph E. Roberts, Jr. (Pittman Germany Roberts Welsh, LLP) for Cook Timber Co., Inc.

Companies: Georgia Pacific Corp.; Cook Timber Co., Inc.

MainStory: TopStory Antitrust MississippiNews

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